Like a dieseling engine that won't quit running, the lawsuits against Sears, Roebuck and Co.'s automotive repair business are hard to stop.
Sears, the nation's second-largest retailer, has once again been sued, this time for allegedly collecting as much as $400 million for tire-balancing services it never performed. A class-action lawsuit filed this week in an Illinois state court estimates that anywhere from 7 million to 30 million people who bought tires between 1989 and 1994 may have been affected.
The lawsuit also accuses Sears of having its employees try to cover up the fraud by destroying the tire-balancing machines in its repair shops and paying $30 million in "hush money" to the company that made the machines to keep its officials from disclosing the alleged fraud.
Sears spokesman David Albritton yesterday called the charges "false and unsubstantiated." He said the accusations were "word for word" identical to another class-action lawsuit filed in federal court in Florida in 1995. That case initially was was thrown out by a U.S. district court judge, but in September 1998 a federal appeals court reinstated the suit.
"We currently have a motion pending to dismiss that complaint, and we are confident it will be successful," said Albritton.
In June 1997, Sears reached a settlement with the Florida attorney general's office over the same allegations. While admitting no wrongdoing, Sears agreed to pay the state $580,000 and offered free tire balancing to customers.
Steven A. Katz, the Illinois lawyer who brought the latest case, said he wanted to make sure consumers were protected before Illinois's statute of limitations ran out while the litigation was still before the courts in Florida.
The latest lawsuit comes just two months after Sears signed another settlement with the State of Florida to resolve allegations that the company sold used car batteries as new ones. Sears denied the allegations but agreed to pay $985,000 and extend free replacement warranties on some of its car batteries.
Scandal has plagued Sears auto repair business for most of this decade. In 1992 the company reached an agreement with 43 state attorneys general to resolve a two-year investigation that charged Sears auto-repair shops with systematically overcharging and overselling unnecessary services. Sears denied the charges but agreed to distribute up to $46.6 million in coupons to customers.